Business Finance (FIN)

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Chapter 5 Homework Time Value of Money is a very important concept and after you read the chapter you will find that it applies to your life in many ways. I find it easier to understand the concept of Time Value of Money when you apply it to something that is happening personally in your life. Maybe you are planning for Kids College; maybe you are buying a house, or planning for retirement. It can even work for smaller purchases as well. Directions: Choose a personal investment that you are planning on participating in or are in the process of or even have recently just made. This does not have to be complicated you can make it as simple or as complicated as you want, I am just looking for you to understand the concept. Investment- In two paragraphs tell me what you are investing in or saving for; let me know what your goals are for this investment. TVM- Work it all out in a Time Value of Money form, give me the nitty gritty, again the fun part about Time Value of Money is that you are literally working out a puzzle and solving those fun if- then questions. o Include PV, FV, I, N, PMT amounts. Conclusion- In two paragraphs, analyze your decision. o Is it a good investment? (look at the numbers, not how you feel). o Should you wait longer? o Can you purchase quicker than you thought? o Can you cut things to make it a better fit? Ask me if you have any questions at all, it can be a concept that is a little difficult and I am more than happy to help you in anyway. Once you get it, you will not lose it. Include any citations that you may have used so I can look at the information you used. Cite them using APA format. Correct Grammar, spelling and APA format is expected Times New Roman font- 12 pt Single spaced Cover page o Name o Date o Assignment o Class name and number Goal of every investor is to grow his investment, growing investment means earning as much as return possible without increasing the substantial amount of risk. Different investors have different risk appetite. Investors in their young age will be willing to take more risk whereas investor in older age will be more conservative and will be averse in taking risk. As an investor my priority will be to reduce risk through diversification of investment so that risk of loss on investment will be compensated by gain on any other investment with opposite correlation , thus diversification plays important role in making investment decision Time against money is one of the significant consideration of every investment, Time represents the period on investment and money is the return business is able to create from the business. All corporate try to minimize the period of the investment and make the most of the money which is return on the business. It is significant to note that the objective of all business decisions is to maximize the value of the firm which involves the concept of time value of money Value of the firm is present value of all future cash flows which are expected to be generated by the firm, thus the money generated at earlier time period by the firm has more importance than money generated at a later period of time. References Hallwood, C. P., & MacDonald, R. (2000). International money and finance. WileyBlackwell. Scott, H. S. (2009). International finance: transactions, policy, and regulation. Foundation Press. Goal of every investor is to grow his investment, growing investment means earning as much as return possible without increasing the substantial amount of risk. Different investors have different risk appetite. Investors in their young age will be willing to take more risk whereas investor in older age will be more conservative and will be averse in taking risk. As an investor my priority will be to reduce risk through diversification of investment so that risk of loss on investment will be compensated by gain on any other investment with opposite correlation , thus diversification plays important role in making investment decision Time against money is one of the significant consideration of every investment, Time represents the period on investment and money is the return business is able to create from the business. All corporate try to minimize the period of the investment and make the most of the money which is return on the business. It is significant to note that the objective of all business decisions is to maximize the value of the firm which involves the concept of time value of money Value of the firm is present value of all future cash flows which are expected to be generated by the firm, thus the money generated at earlier time period by the firm has more importance than money generated at a later period of time. References Hallwood, C. P., & MacDonald, R. (2000). International money and finance. WileyBlackwell. Scott, H. S. (2009). International finance: transactions, policy, and regulation. Foundation Press